More bad news for the economy

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Britain’s economic hopes have been dealt another blow as a key survey revealed that the manufacturing sector contracted for the first time in two years last month.

The Markit Purchasing Managers’ Index recorded a level of 49.1 for July – a reading above 50 indicates growth – down from a revised reading of 51.4 in June. New orders fell for the third month in a row and at the fastest rate since May 2009 – reflecting low domestic demand, Markit said.

Economists said the results do not bode well for third-quarter growth prospects in the UK, after official figures revealed a slowdown in GDP growth from 0.5 per cent in the first quarter to 0.2 per cent between April and June.